Abstract
This research examines the effect of accounting standards on the quality of financial reporting in Nigeria. The broad objective of the study is to determine the effect of financial accounting standard on the quality of financial reporting in Nigeria and also to ascertain if accounting standard is effective in business enterprise. It also aims at bringing to the awareness of the users of financial statement the benefits of financial reporting standard towards improving business performance.
The researcher adopted the primary source of data collection and the chi-square statistical tool was used to test the stated hypotheses. It was found that financial reporting standard has a significant effect on financial reporting in Nigeria and that accounting reporting standard is effective in business enterprise. Finally, it was recommended that the standards setting body maintain cooperation with government regulatory bodies and financial institution so as to ensure compliance and disclosure in all material respect with financial reporting standard requirement. The financial reporting standard (FRS) should ensure full compliance.
CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
The end product of financial reporting is the preparation and publication of financial statement. A substantial number of alternative postulate, principle assumption and method adopted by a reporting entity in the preparation of financial statement can significantly affect its result of operation and understanding the interpretation of financial reporting in financial statement.The financial statement prepared by the accountants is based on convention that is derived from printable reports and there conventions originate from such concepts as: entity, going concern, periodicity, realization consistency, matching concept, historical cost.
These concepts are fundamental to financial reporting standards and presentation of financial statement, disclosure of fundamental financial concept and acts followed.This is because financial statement are for interest to a variety of users, especially shareholders, the use of financial statement clearly valuable evaluation of a reporting enterprise unless if financial statement clearly disclose the significant financial accounting policies that have been adopted in their preparation.Its is also adopted in recognizing measures and values on item of revenue, expense, gain, loss or any asst or liability.
Financial reporting practice have evolved in response to the verity and complexity of types of enterprise and business transaction, there exist more than one recognized calculating profit, measuring depreciation, valuing inventory.Standard accounting practices require publicly traded companies to follow certain accounting rules when presenting financial statements so that the readers of the statements can easily compare different companies. Private companies are also often required by banks and shareholders, for example, to present information according to their specified rules.
Usually, countries practicing civil law system write standards into law and countries with English common law systems have private organizations to set the rules. There are specialist organizations that can arrange for the set-up of an accounting practice with a franchise business model which can prove successful from the out-set.The accounting standards are developed to ensure a high degree of standardization in the published financial statement. They provide the necessary information about how financial reporting information should be gathered, prepared and presented in order to improve the value of its contents and facilitate through understanding.